Horrible Quarterly Earnings Report from Hanover Foods

The quarterly report from Hanover Foods for the period that ended August 29, 2021 shows that sales, gross profit, operating expense, and net income all dropped versus the prior year's quarter.

The company spent $6.4 million on “acquisitions of property, plant and equipment” last quarter. Over the past five fiscal years (not including the recent $6.4 million), the company has spent an immense amount on capital expenditures, a total of almost $80 million dollars.

It is hard to know what this $80 million of capital expenditure has accomplished for shareholders without any disclosure of what it was spent on. Certainly, it is difficult to see in the financial statements that this has been a worthwhile expenditure of capital.

All that we can see is that assets (both current assets and property and equipment) are growing, but seem to be generating less revenue. Asset turnover is slowing. Revenue, gross profit, and operating profit were all lower in fiscal 2021 than they were in fiscal 2017. And since cash from operations has not been sufficient to pay for the capital expenditures, debt has been rising, from total liabilities of $63 million in May 2016 to $106 million in August 2021.

Hanover Fiscal Q1 2022 Earnings by Nate Tobik on Scribd


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